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  3. joplin limited invested 1,000 in a debt instrument

Joplin Limited invested 1,000 in a debt instrument (issued at par) on 1 January...

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Accounting

  1. Joplin Limited invested 1,000 in a debt instrument (issued at par) on 1 January 2018. The term of the debt is five years and the coupon rate of interest attached to the instrument is 6%. Upon redemption, Joplin Limited will receive the initial 1,000 investment back plus a bonus premium of 250. The effective rate of interest is 10.1%.

The fair value of the instrument on 31 December 2018 was 1,100.

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